More than two-thirds of home renovation businesses are seeing revenues and profits equal or greater to pre-recessional levels, according to a new analysis, and about one-fifth of firms are reporting that their revenues and profits are significantly higher.
Online home design platform Houzz released on July 22 its Q2 2015 Houzz Renovation Barometer, which measures how confident home renovation professionals are regarding the strength of the industry.
“A large majority of home renovation firms on Houzz report a return to pre-recession revenues and profits, irrespective of industry segment or firm size,” said Nino Sitchinava, Houzz principal economist, in a news release.
The latest edition of the study also found that there have been very slight year-over-year gains and quite strong quarter-over-quarter gains in the market. Of course, those gains vary by niche; outdoor renovation firms in the Northeast reported the strongest quarter-over-quarter acceleration (not surprising, considering that region is recovering from a harsh winter), and architects in the West have the greatest year-over-year gain in confidence.
The Houzz Renovation Barometer reading, released quarterly, is based on a 100-point scale; the greater the index value is in comparison to 50, the greater the proportion of firms reporting gains instead of losses. The Q2 2015 reading was a very encouraging 69 or higher in all company types.
The reading is expected to be similar for Q3.
That doesn’t mean that there will be no challenges for second half of the year, however. “While industry confidence remains strong for the remainder of 2015, professionals tell us that the shortage of skilled labor continues to be a key challenge to growth,” Sitchinava cautioned.
And while renovations are by no means cheap — a supposedly “minor” kitchen remodel, according to this year’s Cost Vs. Value Report, costs $19,226 on average — post-recession consumers are more sensitive to pricing than they once were, cutting into profit margins.
The full report from Houzz is available online.